Time to review income tax exemptions, brackets

It is good to see that the MacLauchlan government has a balanced budget for the first time in several years.

Part of attaining a balanced budget, by all accounts, was the excess in the health-care budget, including a few million that was applied to the deficit in the roads budget a few months ago. Seems as if the much maligned ‘aging population’ explanation of health-care shortfalls by the present government cannot be that much of a burden after all.

Despite this, Health P.E.I. has stated that their budget will increase by 5.8 per cent this year, after negotiating with the federal government a few months ago to increase the health care amounts. No wonder that the feds want a certain portion of the increase to go to specific areas such as mental health and home care, as opposed to general revenues. Thankfully, these bells and whistles are in place at last.

This being said, it is somewhat encouraging to see that the basic personal income tax exemption is to be increased by 2 per cent for 2017. For 2016 the basic personal income tax exemption is $8,000, an increase over the 2015 amount of 3.8 per cent. So, the percentage was dropped for 2017 to the point of just about covering inflation.

The federal basic personal income tax exemption for 2016 is $11,474, which is $3,474 more than the P.E.I. amount. Most of the federal personal exemptions are yearly indexed to inflation, so how does P.E.I make any headway in increasing the ratio? Given, it is some help to everyone paying taxes.

However, to further help seniors, an increase of the age amount and pension amount tax exemptions would be helpful.

For the 2016 tax year the P.E.I. age amount now lags behind the federal amount by $3,361, the federal amount is $7,125.

Further, the pension income tax exemption for P.E.I. is $1,000, the federal amount is $2,000. The age amount and pension amount have not changed for several years, and P.E.I. tax brackets have not changed much either. This is really hard to believe.

Taking into account the proposed surplus of the 2017-2018 budget, although slim, it seems timely to review the income tax exemptions and tax brackets. It would help a huge amount of Islanders and may even pull some out of abject poverty, an issue that even is touted by the MacLauchlan government as being so important to erase.